Friday Financial Five – March 28th, 2014

The winter months produced a “time-out” of sorts for the housing market. After a severe downturn in 2009, the last few years saw growth that probably wasn’t sustainable, as a buyer’s market slowly morphed into a seller’s market in many areas. The weather, coupled with a change in mortgage qualifications, caused real estate activity to hit the pause button. As spring approaches, inventory is increasing from recent lows and the hope is that warmer weather will lead to an explosion of activity. Buyers will try to lock in interest rates and some lenders will start to ease up on borrower underwriting. It could be the beginning of a healthier real estate market, where neither the buyer nor seller starts with an upper hand.

Getting tougher on appraisal guidelines

The real estate meltdown had several contributors, many of whom have been the subject of public scorn. One group of offenders that may have avoided their fair share of scrutiny was real estate appraisers. Yes, underwriting standards were weak, but the first domino in the process was an appraiser willing to inflate the market values for underlying properties. This week, government agencies laid out a proposed rule for “Appraisal Management Companies”, which act as intermediaries between lenders and appraisers. If states adopt the rule, AMC’s would be subject to supervision and have to comply with certification guidelines.

Widowed spouses missing out on Social Security payments

In the maze of options for collecting Social Security, it’s not surprising that a surviving spouse may not be collecting the maximum available benefits. According to the recent Social Security Administration Office of Inspector General report, nearly one third of widowed spouses over 70 are missing out. According to the SSA, this is the result of a failure in the system to identify those eligible for increased benefits. Those that think they might be entitled to increase benefits should get in contact immediately.

Good news for BOA, bad news for Citigroup.

It’s strange to refer to a $9 billion settlement for a company as “good news”, but reaching finality in these lawsuits is exactly that for Bank of America. The company has been dealing with the Countrywide hangover for far too long and can soon attempt to focus primarily on business matters. Conversely, Citigroup was dealt a blow by the Federal Reserve when their capital plan was rejected. The plan included an increased dividend and a stock buyback but was rejected as part of the Fed’s recent stress test.

“Glitches” expected while complying with FACTA

The IRS expects several glitches for insurance and financial companies trying to comply with FACTA (The Foreign Account Tax Compliance Act), but there is still no intention to move off of the July 1st start date. The act intends to help identify large amounts of money held outside of the United States by requiring financial institutions to report account activity. In a rare display of compassion, Commissioner John Koskinen says of the IRS: “We will be understanding of those problems as long as those financial intermediaries are making reasonable, good faith efforts to comply.”

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at dforbes@forbesplanning.com.

Related Slideshow: 10 Great RI Houses That Just Came on the Market—March 27, 2014

Charlestown

6 Tamanaco Dr.

3 beds, 2 baths

$249,000

Bright and open 3 bed, 2 bath home on private one acre lot. Finished lower with family room, bedroom, bath and walkout. Sun filled kitchen with slider to deck. Close to beaches, Ninigret park and all amenities.

Westerly

11 Benson Ave.

3 beds, 3 baths

$625,000

Misquamicut Beach at its finest with this 3 bedroom,3 full bath home & just a few steps to the beautiful Beach. Enjoy views from the master suite and decks.Terrific back yard with deck for family fun and entertaining after a long day at the beach

Richmond

36 Amberley Ct.

3 beds, 2 baths

$379,900

Custom design on cul-de-sac in desirable neighborhood. Central foyer with cathedral ceilings leads to bright and spacious living. This meticulous home boasts a south facing 4 season porch and 1st floor master suite. Close to I95, shopping and schools